Yen rises to 159 per dollar as markets price an 80% chance of a Bank of Japan hike
Updated September 27, 2026. · Written by Svetoslav Grigorov
VERIFIED USD/JPY trades at 159.01 yen per dollar on August 26, 2026, down 0.12% from the previous session, according to Trading Economics. Over the past month the yen has strengthened 2.90%, but it remains 7.92% weaker than a year ago. Japan's interest rate stands at 1.00% (July 2026) versus the Federal Reserve's 3.75%.
What is behind the move
HYPOTHESIS Markets are currently pricing an approximately 80% probability that the Bank of Japan will raise rates by 25 basis points, to 1.25%, at its September meeting — sharply up from about 23% before the July meeting. Former Bank of Japan board member Seiji Adachi said he sees that hike as likely, and another one as early as January, warning that holding rates could reignite a yen selloff and accelerate import-driven inflation. This is the reading circulating this week, not a fact independently verified by this site, per Trading Economics.
HYPOTHESIS The August 26 session is also explained, per the same source, by falling oil prices on hopes of renewed Middle East diplomacy, which eased near-term inflation concerns, and by dollar weakness ahead of a key US inflation reading and the Federal Reserve chair's speech later this week. Bank of Japan Governor Kazuo Ueda will not attend the Jackson Hole symposium due to a scheduling conflict.
What this does not mean
HYPOTHESIS The yen's 2.90% strengthening over the past month does not undo its 7.92% decline over the past twelve: it is a correction inside a longer weakening trend, not a return to where it stood a year ago. And the 80% probability markets are pricing is just that — a probability implied by today's prices. The Bank of Japan had not made any decision yet (as of August 26; the outcome is in the follow-up below), and its September meeting could surprise in either direction.
How it has evolved since then
VERIFIED The yen has kept strengthening: on September 5, 2026 the pair traded at 156.04 yen per dollar, below this article's 159.01, according to MTFX Group. The move is consistent with this article's reading: the closer the Bank of Japan's September meeting gets, the more ground the currency recovers against the dollar.
Follow-up (September 27, 2026)
VERIFIED On September 18, 2026 the Bank of Japan decided, by a 7–2 majority vote, to encourage the uncollateralized overnight call rate to remain at around 1.25%, up from 1.00%, effective September 24, according to the Bank of Japan. Two days earlier the Federal Reserve had raised its target range from 3.50%–3.75% to 3.75%–4.00%, according to the Federal Reserve. USD/JPY traded at 155.96203 yen on September 17, 156.8845 on September 18 and 157.28504 on September 26, 2026, with a 90-day range of 153.5410 to 163.8715, according to MTFX Group.
CALCULATED From this article's 159.01, the pair fell 1.87% to 156.04 on September 5 and stood 1.08% lower on September 26 (157.28504), after rising 0.80% from September 5. On the day of the hike the yen actually weakened: the pair rose 0.59% (155.96203 → 156.8845). The gap between the top of the Fed's range and the Bank of Japan's rate stays at 2.75 percentage points, both before (3.75 − 1.00) and after (4.00 − 1.25), because both central banks raised by 25 basis points — Claromercado's own calculation, not a figure published by the source.
HYPOTHESIS The hike the market priced at 80% did happen, but with the Fed moving by the same amount the rate gap did not narrow, which may explain why the yen gave back part of its gains after the decision instead of extending them.
Additional sources consulted on September 27, 2026: Bank of Japan: Change in the Guideline for Money Market Operations (September 18, 2026), Federal Reserve: Federal Reserve issues FOMC statement (September 16, 2026), MTFX Group: USD to JPY Historical Exchange Rates. Sources for the update, September 13, 2026: MTFX Group: USD to JPY Historical Exchange Rates. Sources consulted on August 26, 2026: Trading Economics: Japanese Yen, quote and stats, Trading Economics: Japanese Yen Rises as Oil Prices Decline.
Educational notice: this article is analysis based on public data, may be wrong, and is not financial advice. It is not a buy or sell recommendation. The decision and the risk are always the reader's own.